Question and background:
I'm 77 and want to sell my home. It is paid for. I have no other income except for SS. Can I use my equity to invest in a home with my daughter? She takes care of me. Any taxes or can I use the money anyway I need to? I live in MT. I should get approx. 300,000 on the sale.
There are favorable (federal) capital gains tax provisions when someone sells their principal residence. It has to be your primary home and you have to have lived in it for two of the five years prior to sale. If you meet those conditions, then $250,000 of capital gain is exempt from taxes for a single filer, and $500,000 for those married filing jointly.
Now that's exemption of the "gain" not the selling price. So for example, if you originally purchased the house for $175,000 and put $25,000 of eligible improvements into it, your cost basis in the house would be $200,000. That means a single filer would have to sell the house for more than $450,000 before any capital gains tax would apply.
You can use your sales proceeds any way you want. But if you decide to buy a home with your daughter (with you both on the title), be aware that it potentially exposes you both to each other's creditors. For example, if your daughter got in a car accident and it was deemed her fault, if total claims exceeded the coverage on her auto insurance policy, creditors could go after her other assets (which would include a house jointly owned with you). Or if you ran into a financial difficulty and creditors went after your assets, that could harm your daughter's ownership interest in the house. Be sure to consult a qualified attorney if you lean toward going this direction.
Depending on your and your daughter's situation, you may wish to consider a reverse mortgage on your current home. The initial cost can be a bit high but many folks prefer to continue living in their current home ("age in place") and pay for care to come to them. A reverse mortgage wouldn't free-up anywhere near the $300,000 you estimate is the home's fair market value, but it would give you resources to either pay (or "give") your daughter. You can give your daughter up to $14,000 per year without using any of your lifetime gift tax exclusion or having to file a gift tax form.
Hope that helps. All the best!